Need for a Balanced Scorecard - A Case Study

By Karen Fischer                                                            March 24 , 2010

I found myself a few years ago landing in a position which in the beginning looked like a complete disaster and ended up being the greatest management learning experience of my life. I found myself working for a small business that was acquired by a large corporation. If anyone has been on the acquired side of this, I am sure you will understand and can relate to the challenges. The day I walked in the door it wasn’t the question of what was going well, but if anything was going well.

The first month was spent listening and looking at the business while actually being employed by the large company, so the employees questioned my loyalty. Morale was at an all time low, there were several human resource grievances that had not been addressed; the larger company had instigated rules of engagement which were negatively affecting sales, customers were frustrated, and receivables were in a mess.   The million dollar question is where does begin?

I had taken a workshop years back which involved balanced scorecards and my husband has always been a big advocate.        I came home and was telling him a bit about the situation and suggested that I give it a try. It would be if nothing else a good exercise in trying it and with all that is going on it definitely could not hurt. I spent the next couple days putting together an outline of items in the four quadrants of areas that I saw needed improving or addressing from a management perspective and also what the larger company expected: Financial, Business Processes, Customer, and Learning and Growth. I decided that for this to work, that I would have to get buy-in from the employees and make them a part of plan.

One of my issues was employee morale and what they saw as lack of communication on the part of management and the company. They had not felt that they were listened to by the company that purchased them. They were paid less, they felt were not treated with the same respect, and the negativity had truly become unproductive and caused a company that was doing well to slowly slide down hill. The first thing I decided to do was create quarterly meetings.   I had each manager present an overview of their department and where they would like things to go. The initial look I got was not a positive one, but as they saw their employees and peers enjoying this, the body language and mood changed. At the end of the first meeting I talked to them about the balanced scorecard and how this could help us and how I wanted this help and input. I then asked each manager to meet with their staff and at the management meetings over next few weeks we were going to build this out as a team.

Over the next few weeks we filled in the balanced scorecard for the next year of goals and objectives we needed to meet to move things forward.   Interesting enough the initial items I had seen and put on my own version of the scorecard were very similar. In fact, the groups came up with additional ideas that modified or expanded on some of the goals and created new actions and metrics.

The biggest roadblock to success was the employees themselves if they did not participate and become part of the solution. They had to understand that things did not change overnight.It took a couple months, but by the second quarter there were a couple results seen. After that, the entire group became engaged and though they saw me still as working for the large company, I was working with them not against them. At the end of the day they needed to understand that change had already started and that whether they wanted to accept it or not, they were part of that big company.

The key to success of implementing a balanced scorecard is to have buy-in from your employees and make them a part of it because if you are trying to force change or push growth down their throats, failure is eminent. The other thing to keep in mind is to create achievable goals and be able to measure the success.   As soon as the employees saw some positive change even the eternal pessimists in the group had to be quiet. In beginning the top sales rep who had been there for 20 plus years and who others looked up to was one of the largest roadblocks. His sales had dropped off a bit, his attitude was horrible, and I was definitely not someone he trusted or liked. I am not sure he could find something positive to say and when he did speak you could tell the others listened and unfortunately followed.   Over the next while, he saw communication improve and that he was being listened to as well was being asked for advice.   There were HR/benefit issues that hadn’t been addressed and were now being looked into and he and the employees who were under paid in relationship to others doing the same job in the large company were handled.   The thing we do not like to admit as managers is that we do not have full control and that one person like this if not dealt with in the right way can negatively affect the other areas as well.  

We then implemented employee incentives and tied them back to the actions on our scorecard.   We went through these as a company quarterly to see where we were and each group looked at their areas individually as well.   When December came the next year, it was like it was a different group of people and a different company.   Everyone was working for a common goal and if someone was not pulling their weight or was not part of the team, their peers let them know.

Remember the sales rep?   Well by the end of the year, he was a changed person and got the top sales rep award.    He over achieved his quota and in the next year took an increased quota, which I found out later he also over achieved. He began leasing as he found out not only did it benefit the company, it benefited his pocketbook. Prior he just hated the fact the leasing company was owned by the large company.   He then had all of the other sales people hooked as well and we increased our leasing rate over 50%. Because as a management team we had supported him through being negatively impacted by rules of engagement, when there was a situation arose, he became the advocate for coming up with a solution versus jumping to conclusions. This did not mean that everything was resolved, but he began to trust me and his manager and when he was upset, he knew he could come in my office and just vent.   The greatest gift I got for Christmas that year was him coming in my office to thank me.

A balanced scorecard is not the answer to everything, and is not something that you should try to use to achieve certain goals and then just abandoned. It is a tool that helps facilitate change and growth, it is imperative that the employees and your management become part of it. It aids you in building the internal processes to aid with continuous improvement. It is only a tool. For success to be seen, that is up to you and your team. .It is also important that you track the results and the metrics that you come up with are achievable or within reach, because one way to create your own failure is by not achieving any of the results and then it was a futile exercise and no one will be motivated to try again.

So many times we do stop to realize that our employees are our biggest asset and they can actually make or break a company. They can affect customer satisfaction, the financials, our business processes and can internally affect how well everyone else performs.  I believe the key to the success that myself and my team saw was working together and everyone being involved in helping create the goals. Everyone may not be able to totally articulate what the “business” need is to track, but their ideas and what they see internally and externally are important and need to be captured and then related back to an actual goal in one of the four quadrants.